Magazine article Journal of Property Management

Good Things in Big Boxes

Magazine article Journal of Property Management

Good Things in Big Boxes

Article excerpt

You're not the only one fighting middle age. Watch how three real estate managers powered their aging centers into the "Big Box" '90s

Once the "cool" destinations for moms in capri pants and teenagers in '57 Chevies, the sleek shopping oases of the 1950s are showing their age. Many thirty-something centers have antiquated layouts. Small enclosed malls can't compete with the super-regionals. Shabby strips can't attract good tenants. And most old centers no longer have the same shopper profile as they did when they were established.

Managers are fighting back, however. They're finding ways to reshape outdated malls and turn money losers into star performers.

Some managers are starting from scratch, completely razing their centers. Others are reconfiguring their properties and juggling the tenant mix.

But bringing an old strip into today's "big box" retail climate is no easy task. As the following three case studies show, the rescue of an ailing mali is fraught with pitfalls - and potential paybacks.

Boxing It In

Seven Corners was the first mall built in northern Virginia's Fairfax County back in the mid-1950s. In its day, the design was state-of-the-art. Although it wasn't enclosed (indoor malls didn't appear until the mid-1960s), Seven Corners was the first center to offer suburbanites a healthy mix of retail tenants. Seven Corners was anchored by Garfinckel's and Woodward & Lothrop, two well-respected local chains.

Beyond the big anchor spots, the center had a two-story arcade with exterior stairs. Small specialty stores lined this strip.

Like many centers whose evolution followed the course of retail trends, Seven Corners was enclosed in the 1960s. And even though the super-regional, 1.2 million-square-foot Tysons Corner Center was built nearby in 1981, Seven Corners was able to hold its own for quite a while. Aggressive advertising campaigns kept people shopping there.

Gradually though, the 450,000-square-foot property declined. Sales were depressed, and vacancies climbed past 10 percent. The Garfinckel's store, a victim of the '80s leveraged buyout craze, was closed in 1990.

In 1993, the property was purchased by Saul Centers Inc., Chevy Chase, Md., a real estate investment trust. According to the company's vice president of management, Charles W. Sherren Jr., the REIT believed the property had potential despite its antiquated design and rent delinquency woes.

"It was a gem of a location," says Sherren. "It was an absolute diamond in the rough."

Sherren describes the mall's two levels as an "interesting challenge." On the plus side, the mali sat on 40 acres giving it good potential for expansion and reconfiguration.

"We looked at the whole site and came up with a concept that would maximize square footage and pad sites. We also wanted to get rid of the old heating and cooling plant. We wanted something innovative," Sherren says.

The mall was redone as a two-sided outdoor strip for "big box" users. The exterior walls were left standing and the roofing systems remained, but the interiors were completely gutted.

"There were surprises behind the drywall. It's amazing what you'll find in a 40-year-old property when there have been renovations," says Sherren, referring to the tangle of wires and pipes jammed inside.

A 130,000-square-foot Best Buy store was signed to anchor the center section of the main building. Other new retailers included PetSmart and Barnes & Noble.

The number of outlot pads was increased, and the small service tenants were consolidated into a separate, 28,000-square-foot building. (Small stores now include a bank, bakery, video store, tobacco shop, dry cleaner, and shoe repair shop.)

"Now you can come in the main drive, and if you don't want to go to a destination store, you can park near the service stores and do your errands. It's very convenient," Sherren says. …

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